Wicker: Don’t Miss New Tax Benefits

Thanks to Congress' 2025 tax cuts law, Mississippians can expect to pay less and receive higher returns this Tax Day. Most filers have heard about the increased standard deduction, but the Working Families Tax Cuts include several other benefits that Mississippians should consider as they submit their paperwork to the Internal Revenue Service.

No Tax on Tips, Overtime

First, the law cuts taxes on tips and overtime pay. This is a boon to the millions of Americans relying on tips for a significant part of their income. Now, salon and restaurant staff, many 1099 contractors, and other workers powering large segments of our economy can deduct up to $25,000 earned through tips.

Many Americans also regularly receive overtime pay. This year, they can deduct the "half" portion of the "time-and-a-half" income from their taxes for a benefit of up to $12,500. Both the tip and overtime deductions apply to workers earning less than $150,000.

Interest Deduction for American Cars

Last year's tax cuts also reward those who bought a new, American-made vehicle. Taxpayers can deduct up to $10,000 in interest paid on those auto loans, provided that the car was purchased in 2025 or 2026. This provision is targeted squarely at the middle class, applying to individuals earning less than $100,000 or joint filers who bring home less than $200,000 together.

It is easy to learn if your vehicle was made in the USA. Every car, truck, or van has a Vehicle Identification Number (VIN). Visit the website of the National Highway Traffic Safety Administration and type your car's number into the VIN Decoder tool, which will indicate where the vehicle was produced.

More Income Stays with Seniors

More than four million Americans turned 65 last year, giving them access to another benefit of the 2025 tax cuts. Now, they-and anyone 65 and older-can deduct an additional $6,000 from their taxes, a figure which doubles when they file with their spouse. The increased deduction applies to all seniors making $75,000 or less or $150,000 if they file jointly.

Childhood Investment Accounts

I would be remiss not to mention a better-known element of the Working Families Tax Cuts: the new childhood investment opportunities known as Trump Accounts. These free investment accounts can be opened for all Americans under 18, with special privileges for the youngest children. Those born from 2025 through 2028 can receive an account seeded with $1,000. And when accounts are started for Mississippians born from 2014 through 2024, they will come with an initial $250.

Both the $1,000 and $250 amounts are a one-time investment meant to jumpstart these savings funds. But no matter their age, children can accept contributions from parents, grandparents, charities, or businesses-up to $5,000 a year. As children grow, they can watch their investment accumulate and learn valuable lessons about patience and financial planning. When they turn 18, these new adults can use the funds for college, to start a business, or to buy a home. Interested parents should visit trumpaccounts.gov or talk to their accountant to learn more.

Lower Taxes Promote Growth

These accounts will help prepare children for success, just as the broader tax cuts law sets the American economy on a path of growth. If Republicans had not extended the 2017 tax cuts, the average Mississippi family would have owed $1,570 more this spring. That would have been disappointing to taxpayers, and it would have held our country back. But by keeping more money in the hands of Americans, we allow them to contribute to the bustling, growing U.S. economy.